Economists of every stripe, from Marx to Milton Friedman, have a consensus on the nature of land: "Land is a natural commons — it belongs to everyone, and that land value (rents) should be recaptured by the community, who create the value in the first place."
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When your property becomes more valuable, it has virtually nothing to do with any action you've taken. Even the most ambitious home-improvement shifts house prices by small margins.
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What DOES increase land value is what everyone else does: the businesses, schools, amenities, transit links, street furniture, planning, and other improvements made to your land's LOCATION.
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This was driven home for me a couple years ago when we bought and thorougly renovated a home in LA after an overseas move. We'd insured our personal effects, and we'd done major renos, and we'd just closed on the house, so (thought) I knew what the renos and goods were worth.
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Then I took out earthquake insurance, which covers the house and contents - but not the land - and I was amazed to learn that everything apart from the lot was worth a tiny slice of the total. Land is where the value is, and that value comes from the community, not the owner.
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In "A New Land Contract," @AlastairParvin's talk at Civic Square's 'Department of Dreams,' in Jun, Parvin develops this observation along with the history of land development to lay bare some truths that have been made far more obvious by the crisis.
medium.com/@AlastairParvi…
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medium.com/@AlastairParvi…
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Housing is remarkable expensive, and getting more expensive all the time. When the crisis came, the UK (and US) governments bailed out mortgage borrowers (including virtually every landlord) but not their renters.
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"As taxpayers we’re pouring billions of pounds of life support into the economy, but a huge chunk of it is just being paid straight on to private landlords. If you think of the economy as a bucket, it’s like having a huge hole in the bottom of it. Or rather, the top."
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All the injustices that we see in the world - racial wealth gaps, gender gaps, etc - are magnified by this dynamic. If you're a landlord, you're overwhelmingly likely to be white. If you're brown or Black, you're overwhelmingly likely to be a tenant.
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Rising land prices extract a fee from every business and ever renter, a fee just for being alive and conducting your affairs. It's a tax on life, levied by private landowners, and that is literally by design.
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The modern system of land-ownership has its origins in feudalism: specifically, it was how William the Conqueror could afford his army. Rather than keeping a standing army, he gave nobles a contract giving them dominion over some land and its residents.
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The noble was obliged to contribute soldiers to the king on demand, and in return, he was empowered to extract any rent he chose from the people on the deeded land. The origin of "feudal" is feudalis: Latin for "fee." Feudal means "rent-based."
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Modern states updated this system, doing everything - anything - to keep property values high, especially loosening finance rules to allow lenders to pump titanic sums into the property market. Home ownership is an intensely political goal, the cornerstone of Thatcherism.
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Not just ownership of your home, but ownership of someone else's: the "income property" that provides "passive income" that you can leave to your kids: the heritable right to tax other people for being alive.
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Today, the UK is a nation dependent on the "business" of taxing people and firms for simply existing - that is, rentierism. 83% of the total wealth of the UK is land. The UK spends £71bn on rent and £67bn on mortgages per year, enough to pay for a whole other NHS.
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Meanwhile, the grossly inadequate housing benefit costs £23b/year - more than is spent annually on the UK highways, police and military combined - all to try to address the social crisis created by rentierism.
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Talking about property this way may sound weird, but it's actually pretty mainstream, historically speaking. Here's Winston Churchill on the subject:
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"To not one of those improvements does the land monopolist… contribute, and yet by every one of them the value of his land is enhanced.
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"He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived."
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Nor does this problem lack for solutions. As Parvin points out, there is a longstanding, well-theorized movement to replace landlords with land STEWARDS, "effectively renting a piece of land from Everyone for as long as you want it, paying the community for its use."
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Pavin enumerates many of the proposals to make this shift:
* Public land buy-backs, at a savings of £6b/year in public subsidies and £35b/year in rents
* Land value capture, local govts buying ex-industrial land and developing it for community use, saving £9.3b/year
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* Public land buy-backs, at a savings of £6b/year in public subsidies and £35b/year in rents
* Land value capture, local govts buying ex-industrial land and developing it for community use, saving £9.3b/year
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* Soft landings: a national land trust that slowly buys land from under peoples' homes and leases it back
* Fairhold (Pavin's new proposal): local governments buy land and license it to stewards who pay fair rents
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* Fairhold (Pavin's new proposal): local governments buy land and license it to stewards who pay fair rents
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As Pavin points out, land ownership is at the root of inaction on climate: "we will need to fix this obsolete right of extraction that is coded into the foundations of our society, this dysfunction that is coded into the foundations of our economy...
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"...this injustice that is coded into the foundations of our democracy."
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